Individual takes action against Revolut for APP fraud

Mr Larsson brought claims against Revolut, following payments it accepted that resulted from an APP fraud on Mr Larsson. Mr Larsson was a Revolut customer, but the payments in question were made by him from his account with UBS. Fraudsters had set up 5 separate accounts at Revolut in Mr Larsson’s name and sent him invoices for transfers totalling nearly CHF 500,000 allegedly as consideration for purchasing shares in an entity that did not exist. The invoices identified Mr Larsson himself as the beneficiary and gave his address as the beneficiary address.

The judge commented that it was hard to understand how Mr Larsson could have thought the destination accounts were his or how he thought making transfers to them could constitute payment for the shares, but he claimed he was told the process would “provide some sort of a safeguard”. The destination accounts were in fact opened in the names of 5 different individuals. Once the payments had been made, the perpetrators quickly transferred the money out, often giving Revolut reasons for the urgency that were obviously suspicious. Revolut would also have had access to SWIFT messages, and the one in evidence clearly showed a discrepancy between the name of the account holder and the name of the beneficiary.

Mr Larsson received a sixth invoice for payment, but Revolut rejected this, although it is not known why it did so.

Mrs Larsson claimed for:

• Revolut’s failure to detect/take adequate steps to mitigate and/or prevent fraud constituting a breach of contract and/or of its like duties in tort that it owed to Mr Larsson
• Revolut being liable in restitution for unjust enrichment in respect of the sums Mr Larsson paid to the destination accounts and
• Revolut being liable as an accessory to a breach of trust – which, at the hearing, was clarified to mean a claim in dishonest assistance in a breach of trust, because it give assistance to the perpetrators of the fraud in circumstances where it had sufficient knowledge of facts which should have put it on notice that a breach of trust was or may have been being committed, but turned a blind eye to it.

The hearing did not consider the unjust enrichment claim, which was agreed should await the outcome of a judgment in a similar case.

On the contract/tort argument, it was important to note that Revolut was acting as a recipient PSP and at no times on Mr Larsson’s instructions – its customers were the destination account holders, on whose instructions it was obliged to act. Also Mr Larsson intended the payment be made to the destination accounts (and not to his own account with Revolut).

The court held that Revolut did not owe Mr Larsson any contractual duty nor in principle a duty in tort – although the judge accepted that it may be established at trial that the reason Revolut blocked the sixth payment may mean it should have blocked the others.

On the dishonest assistance claim, the judge agreed that it would be necessary for Mr Larsson to provide greater details of how it arose and identify an individual at Revolut who was dishonest but said the claim should not be struck out at this stage for failure to do that up to this point. The judge pointed out that he was not commenting on the merits of the claim, just saying that the bar for Mr Larsson to meet would be a high one.

So the claims in contract and tortious duty of care were struck out, but the judge did not strike out the dishonest assistance claim, giving Mr Larsson a chance to remedy the pleading defects.